Economic Situation German steel and metal processing industries: Catching up with brakes on

Source: Press release

Germany — “Medium-sized industries see a glimmer of light on the horizon. But not more — the costs are too much of a burden.” This is how the German Steel and Metal Processing Association (WSM) assesses the economic situation in light of the latest preliminary figures from the German Federal Statistical Office.

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The WSM (photo: Managing Director Christian Vietmeyer) is calling for political support for steel and metal processing companies. “Even when the economy is doing well, they can no longer cope with the current additional burdens.”
The WSM (photo: Managing Director Christian Vietmeyer) is calling for political support for steel and metal processing companies. “Even when the economy is doing well, they can no longer cope with the current additional burdens.”
(Source: Mourad ben Rhouma)

The German steel and metal processing industries show a plus of 10.4 percent in production growth for 2021 compared to 2020 — but also a minus of 3.5 percent compared to the pre-crisis year. Whether the shaken automotive suppliers in particular will soon be able to make up further ground is — in addition to overcoming supply bottlenecks — a cost issue: rising material, energy and logistics burdens as well as growing climate protection requirements are slowing down the recovery process. "We urgently need political support here in order to maintain the international competitiveness of the manufacturing sectors and their jobs," therefore demands the WSM.

In 2021, material bottlenecks in particular halted production growth — according to the WSM, the order situation and capacity utilisation would otherwise have enabled a larger increase. Whether, when and how supply chains will ease in 2022 is still unclear, but automakers are cautiously optimistic about the second half of the year. This glimmer of light raises their suppliers' forecast for the next six months by four percent. According to WSM, if material and parts supplies stabilise, production growth of around seven percent could even be achievable for 2022 as a whole.

Additional burdens hamper positive development

However, the ray of light on the horizon will lose its shine if politicians fail the companies. This is because new clouds have long since appeared in the supplier sky: extremely rising input material, energy and logistics costs on the one hand and the demand for a rapid transformation to CO2-neutral production on the other. Even if the economy develops positively, these additional burdens will become an obstacle for the mostly medium-sized companies without political help.

“The German government needs to accompany the far-reaching adjustments around transformation across all stages of the value chain. Just as we demand with the Carbon Border Adjustment Mechanism (CBAM),” emphasizes WSM CEO Christian Vietmeyer. The WSM expects German politicians to commit themselves to this at the European level as well, in order to protect the international competitiveness of local companies.

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